Third-Largest Xerox Shareholder Pouts Over Fujifilm Talks

Reported discussions between Xerox and Fujifilm Holdings Corporation about a potential joint venture agreement have raised concerns for at least one of the print giant's largest investors.

Former Affiliated Computer Services CEO Darwin Deason, who sold his company to Xerox in 2010, blasted the Norwalk, Conn.-based company's handling of the Fujifilm talks in a letter penned to its board of directors on Wednesday. In it, he demanded that Xerox disclose details of its "critical joint venture agreement" with the Tokyo-based document and imaging company, arguing that doing so is clearly required by U.S. securities laws.

"I further demand that the Board hire new and independent advisors following discussions with us to evaluate the Company’s strategic options with Fuji," Deason wrote, "including the potential termination of what I suspect but am unable to yet confirm is a one-sided value destroying agreement disfavoring Xerox, that Fuji has repeatedly breached, including last year through the Asian 'WorldCom' accounting scandal at Fuji Xerox."

Fuji Xerox, a joint venture co-owned by Xerox and Fuji since 1962, develops, manufactures and distributes document processing products in the Asia-Pacific region. The business entity restructured its Australian and New Zealand subsidiaries last year in the wake of an accounting scandal which saw overstated revenues of $450 million over five years, according to Financial Review.

Deason denounced the lack of available information about the rumored deal following last week's report in The Wall Street Journal, which itself contained few specific details, and criticized CEO Jeff Jacobson for a "lethargic" approach to providing relevant documents. The Journal wrote that "an array of possible deals" are on the table but a full takeover is not expected to be under consideration.

"At a time when the Board should be aggressively pursuing our shareholder rights to terminate the Fuji venture and liberate the Company globally, to instead plot in secret in violation of the law to cook up a short-term band-aid is insufficient and unwise in the extreme and warrants shareholder action," Deason wrote.

Late Wednesday Xerox issued a statement in response to Deason's complaints. "We have reviewed the letter from Mr. Deason and believe his assertions and characterizations are false and misleading. The Xerox Board of Directors and management are comfortable with our disclosure and confident with the strategic direction in which the company is heading, and we will continue to take action to achieve our common goal of creating value for all Xerox shareholders."

Deason's public criticisms of Xerox come just one month after Carl Icahn supporter Jonathan Christodoro resigned from the Xerox board of directors, citing disagreement with other board members over Xerox's strategic direction. Icahn, another one of Xerox's largest shareholders, followed that move by calling for Jacobson's removal as CEO and the election of four hand-picked board nominees.

In 2016, it was Icahn who pushed Xerox to split the company and spin off its business services division as a separate entity. That eventually took place with the formation of Conduent, which includes Affiliated Computer Services, but not before Deason filed a lawsuit against Xerox aimed at derailing the plan.

Xerox was not able to provide immediate comment when reached by CRN.

Partners who spoke with CRN last week said an enhanced alliance between the two companies could help Xerox from a competitive perspective, given Fuji's strong A3 and A4 products. It should be noted, however, that few concrete details of the agreement were public knowledge at the time.